W.C. No. 4-344-781.Industrial Claim Appeals Office.
September 11, 2003.
ORDER OF REMAND
The respondent and the claimant separately seek review of an order of Administrative Law Judge Stuber (ALJ Stuber) which assessed penalties for the respondent’s violation of former § 8-43-203(2)(b)(I), C.R.S. 1996. We set aside the order and remand the matter for further proceedings and the entry of a new order.
This matter was previously before us and a brief procedural history is necessary to understand the issues on appeal. In 1995 the claimant suffered a compensable injury. On February 15, 2001, the claimant was awarded permanent and total disability benefits subject to allowable offsets and credits for permanent partial disability benefits previously paid.
On March 9, 2001, the respondent made a lump sum payment of accrued permanent total disability benefits less a credit of $10,296.00 for permanent partial disability benefits paid pursuant to a previously filed final admission of liability. On April 24, 2001, the respondent filed an amended final admission of liability for the payment of permanent total disability benefits. The “Remarks” section of the admission stated, “[P]ayment of PPD paid from 9/4/97 to 12/28/98 of $10,296.00 to be taken
as a credit against future payments of PTD.” (Emphasis added).
The claimant objected to the amended final admission and requested a hearing on the “overpayment alleged by Respondents.” A hearing was scheduled for August 22, 2001. The claimant’s attorney also wrote to the respondent and asserted that the $10,296 credit had already been taken and was no longer available in April 2001. On August 20, 2001, the respondent filed a corrected amended final admission of liability for the payment of permanent total disability benefits which stated, “[P]ayment of PPD from 9/4/97 to 12/28/98 of $10,296.00 has been taken as a credit against PTD payments.” (Emphasis added).
On August 30, 2001, the claimant requested penalties against the respondent for “alleging an overpayment on the Final Admission of Liability dated 4/24/01 when the overpayment had already been taken.” The respondent moved for summary judgment denying the penalty request. The respondent argued there was no violation of any statute or rule, and there was no genuine issue of material fact concerning the respondent’s liability for penalties.
The claimant objected to summary judgment. ALJ Harr found there was no “intent” to deprive the claimant of awarded benefits and no action was taken to diminish the claimant’s award after March 9, 2001. Further, ALJ Harr stated he was “unable to discern the nature of” the alleged violation under § 8-43-203(2)(b)(I). Accordingly, ALJ Harr granted summary judgment dismissing the claim for penalties. The claimant appealed ALJ Harr’s order.
On appeal we concluded ALJ Harr erred insofar as he found the claimant’s allegations failed to establish a violation of §8-43-203(2)(b)(I). Consequently, in our Order of Remand dated April 24, 2002, we set aside ALJ Harr’s order and remanded the matter for further proceedings to afford the parties the opportunity for an evidentiary hearing on the question of whether the respondent’s actions were objectively reasonable for purposes of assessing penalties under §8-43-304(1), C.R.S. 2002.
On remand, ALJ Stuber determined the respondent failed to present an objectively reasonable basis for mistakenly asserting a credit against future permanent total disability benefits when the credit had already been taken. Therefore, ALJ Stuber imposed penalties at the rate of $20 per day for 118 days. Both parties timely appealed ALJ Stuber’s order.
On review of ALJ Stuber’s order, the respondent contends, inter alia that we erroneously granted summary judgment when there were disputed issues of material fact. We agree.
Initially, we note that the respondent’s Designation of Record includes the “entire files maintained by the Division of Workers’ Compensation and Division of Administrative Hearings.” The record transmitted to us on appeal apparently does not include the complete Division of Workers’ Compensation file and there is no evidence in the record which tends to suggest the respondent requested the ALJ to consider the entire Division of Workers’ Compensation file as part of the evidentiary record for the hearing. See City of Boulder v. Dinsmore, 902 P.2d 925 (Colo.App. 1995); Rules of Procedure, Part VIII(A)(6), 7 Code Colo. Reg. 1101-3 at 22. Further, our review is limited to the evidentiary record before the ALJ. Consequently, we have not obtained or considered the Division of Workers’ Compensation file, and have restricted our review to the record made at the hearing.
Due process of law requires that the parties be afforded an opportunity to confront adverse witnesses and present evidence and argument in support of their position. Hendricks v. Industrial Claim Appeals Office, 809 P.2d 1076 (Colo.App. 1990). Summary judgment is only proper if there is no genuine issue as to any material fact. Serna v. Kingston Enterprises, 72 P.3d 376 (Colo.App. 2002); Service Supply Co. v. Vallejos, 169 Colo. 14, 452 P.2d 387 (1969); Morphew v. Ridge Crane Service, Inc., 902 P.2d 848 (Colo.App. 1995).
The imposition of penalties under § 8-43-304(1) is a two-step process. If a violation of the Workers’ Compensation Act (Act) is found, the violator is not subject to penalties unless there is also a finding that the violator’s actions were objectively unreasonable. City Market, Inc. v. Industrial Claim Appeals Office, 68 P.3d 601 (Colo.App. 2003). However, § 8-43-304(4), C.R.S. 2002, provides that if the violation is cured within twenty days of an application for hearing on the issue of penalties, no penalty may be imposed in the absence of “clear and convincing evidence” that the violator “knew or reasonably should have known” of the violation.
Here, the claimant concedes the respondent “cured” the alleged violation prior to her filing of the application or hearing on the issue of penalties. Furthermore, the record reflects a factual dispute between the parties concerning whether the insurer knew or reasonably should have known that the April 24 final admission violated the Act.
It follows there was at least one disputed issue of material fact concerning the respondent’s liability for penalties. Under these circumstances, we agree with the respondent that our Order of Remand, which effectively granted a partial summary judgment was improper.
In reaching our conclusion we reject the claimant’s contention that § 8-43-304(4) is inapplicable because the respondent “cured” the violation prior to her filing of the application for hearing on the issue of penalties. Although, the statute does not preclude the imposition of penalties for a violation which occurs prior to notice of the penalty claim, see Adkinson v. National Rooter, W.C. No. 4-197-635 (August 11, 1995), it would be inconsistent with the purpose of the statute to hold that the heightened standard of proof is inapplicable where the violator cures the alleged violation even before the request for penalties.
As a consequence of our erroneous award of partial summary judgment, the parties were not afforded an opportunity to present evidence and argument on the issue of whether the claimant presented clear and convincing evidence that the insurer knew or should have known of the alleged violation or any other disputed issue of material fact. Consequently, we conclude it is necessary to set aside ALJ Stuber’s order and remand the matter for further proceedings to afford the parties an evidentiary hearing on all issues and defenses relevant to the claimant’s request for penalties.
In view of our disposition it is premature to consider the respondent’s further arguments or the claimant’s contention ALJ Stuber abused his discretion by failing to impose a greater penalty.
IT IS THEREFORE ORDERED that ALJ Stuber’s order dated, January 29, 2003, is set aside and the matter is remanded for further proceedings and the entry of a new order on the issue of penalties.
INDUSTRIAL CLAIM APPEALS PANEL
______________________________ David Cain
______________________________ Kathy E. Dean
Copies of this decision were mailed September 11, 2003 to the following parties:
Inez Anderton, RR #1, Box 1704, Roosevelt, UT 84066
Hewlett Packard/Agilent Technologies, P. O. Box 2197, Colorado Springs, CO 80901
Emily Finn, Sedgwick CMS, 7400 E. Orchard Rd., #4015, Greenwood Village, CO 80111
K. Pennucci, Special Funds, Tower 2, #630, Division of Workers’ Compensation — Interagency Mail
James A. May, Esq. and Steven U. Mullens, Esq., P. O. Box 2940, Colorado Springs, CO 80901-2940 (For Claimant)
David J. Dworkin, Esq. and Margaret Garcia, Esq., 3900 E. Mexico Ave., #1300, Denver, CO 80210 (For Respondent)
BY: A. Hurtado